ADVANCED TIF: WELCOME TO THE

MAJORSLeague of Municipalities 9/22/11

R. Mark Cory &Patricia J. MartinAhlers & Cooney, P.C.

100 Court Avenue, Suite 600Des Moines, IA 50309-2231

mcory@ahlerslaw.compmartin@ahlerslaw.com

Telephone: 515-243-7611FAX: 515-243-2149

These questions are “advanced” meaning that there may not be a statutory provision, rule or case that gives guidance. Consequently, our opinions are based on reasoned analysis, but are not a guarantee of what a court would decide. Also, answers to legal questions about Iowa urban renewal law can vary greatly depending upon the specific facts in a given situation. Please consult your attorney on specific questions.

1. Is an urban renewal area the same as a TIF area?

A. Yes, always;B. Sometimes it is, and sometimes it is not;C. It never is the same area.

2. Having multiple TIF areas within an urban renewal area might be used to

achieve:

A. Protection against erosion of increment since taxes attributable to each TIF District are not affected by valuations of other TIF Districts;

B. In order to preserve the statutory time period for the division of revenue in an economic development area;

C. Complexity and potential administrative headaches for the city and the county;

D. All of the above.

3. In negotiating a development agreement should the city be concerned about the

creation or retention of jobs?

A. No, increasing the property value is good enough because the whole purpose of the urban renewal chapter is to generate increased property values;

B. Yes;

C. It depends upon what the city is offering, and whether the urban renewal area was formed on a finding of economic development or slum/blight;

D. None of the above.

4. Which of the following applies to all cities when using TIF increments in an economic development area for a non-low and

moderate income housing project?

A. Limit the division of revenue to ten years;B. Receive the written consent from the other taxing entities to extend the

division of revenue for up to additional five years;C. Create an LMI "set-aside" equal to the percentage of low and moderate

income residents for the county in which the urban renewal area is located;

D. TIF Funds used only to pay for public improvements constructed by the city.

E. None of the above.

5. Which factors might warrant "upfront" grants rather than tax rebate grants?

A. If the amount is fairly in small in relation to the amount of Tax Increment already available;

B. If all other options have been explored and the grant is essential to land a very attractive project (in terms of increased taxable value and jobs);

C. If the city itself (or a financial advisor retained by the city) has performed a risk assessment relating to the project and the grant and the risk of underdevelopment or non-development is low;

D. All of the above.

6. If the city does decide to make an upfront grant, what type of security should a city

consider?

A. A minimum assessment agreement setting the actual valuation at a certain minimum once the project is complete should be signed not only by the developer but all lienholders (e.g. mortgage holders);

B. The developer should agree to a shortfall provision that requires a developer to make up any shortfall (regardless of the reason) between the Tax Increment produced on the property and the city's debt payment (assuming the city has incurred debt to make the upfront grant).

C. An escrow agreement where the developer makes contributions to an escrow fund that can be drawn to fund the shortfall agreement;

D. Developer could provide a letter of credit or guaranty of the obligations in the minimum assessment agreement and the development agreement;

(6 cont.)

E. Developer could bring a bank or buyer for a city's urban renewal revenue note to fund the grant. Such notes can be drafted so that the debt service is paid solely from the revenues of the Project (i.e., the tax increment from the new building). The note holder, then, takes the risk of a shortfall in tax increment.

F. If property is transferred from the city, the city could retain a reversionary interest in the property upon a default;

G. Prior grants would be "clawed back" upon any default;

H. All of the above.

7. Which of the following is required to qualify a particular project for a TIF reimbursement?

A. The project is located within the urban renewal area boundaries.

B. The project is allowed by Chapter 403.

C. The project is authorized under the urban renewal plan.

D. The project will further the purpose for which the plan was adopted, i.e., it will prevent/eliminate blight or foster economic development.

E. All of the above.

8. A developer seeks $50,000 to put a road in for an industrial park, and asks the city to

enter into a development agreement providing that as soon as the developer puts in the road, the city will pay the developer the cost of constructing the road. Which of

the following statements is true?

A. The city should be concerned that it may be violating the public bid statutes under these facts;

B. A better way would be for the developer to be obliged to do a number of activities, such as marketing and selling lots, developing property into five developable commercial lots, selling such lots at a price no greater than $10,000 per lot within 3 years before the developer is eligible for reimbursement;

C. It might be a good idea to make sure the incentives to the developer do not equal the exact cost of installing the road.

D. All of the above.

9. May property that is located within an urban renewal area be removed from that area, and added

to a different urban renewal area?

A. Yes;

B. Yes, unless the property was originally located in an economic development urban renewal area used for a residential non-LMI project;

C. No;

D. No, unless the area in which the property was originally located was a "blighted" area.

10. During the process of adopting an urban renewal plan, which expenditures will qualify

for reimbursement under 403.19?

A. Property purchased in anticipation of the urban renewal plan being adopted;

B. Work done by the developer as long as the city council signed a letter of intent;

C. The costs of planning and legal work to establish the area;

D. None of the above.

11. If the city wants to sell property that is in an urban renewal area, which of the following

statements is true?A. The city always has to conduct competitive bidding when the property

is being sold for an industrial project;B. The city always has to transfer the property for a fair market value;C. Fair market value and competitive bidding rules apply only to the

actual sale of property and not to the lease, transfer, or other transfer of interest in a property;

D. The city need not transfer property at fair market value or under a competitive bidding process if the real property is transferred in connection with a written minimum assessment agreement from the developer and the actual value in the agreement indicates that there will be sufficient taxable valuations to permit the collection of incremental taxes in an amount that would pay the city back its debts/costs within four years following the commencement of full operation.

12. Which of the following statements is false?

A. The city needs the county's consent to form an urban renewal area if the area includes land that is outside the city limits but within two miles of the city limits;

B. The county needs the city's consent for an urban renewal area if the county proposes to include land within two miles of a city;

C. A county can never include property within a city’s corporate limits in a county urban renewal area.

13. Which of the following actions can be accomplished by an amendment to a plan?

A. The inclusion of property;

B. The deletion of property;

C. Authorization of a specific project and update estimated project costs;

D. All of the above.

14. Which of the following would take a specific property outside the definition of "agricultural land" for urban renewal purposes, thereby eliminating the

need for the owners' consent to have such land included in an urban renewal area?

A. The land has been used for the production of agricultural commodities during three out of the past five years;

B. The property has been broken down into tracts or lots of less than ten acres;

C. The property has been taken out of agricultural production for purposes of environmental protection or preservation;

D. None of the above.

15. If you have an urban renewal area or an amendment area that was adopted before January 1, 1995, there is no limit to the number of years for which revenue can be divided (i.e. no "sunset").

A. True;

B. False;

B. It depends.

16. When does the division of revenue end for an urban renewal area that has been designated as both

blighted and economic development?

A. It depends when the area was first established;

B. It depends on if there is a self-imposed sunset in the plan;

C. It depends on how much of the area is blight versus how much is economic development;

D. All of the above.

Bonus RoundA Developer wants to construct luxury housing around a golf course on ground that is now used to grow hay. The Developer will guarantee at least 20 new houses and a new taxable value of not less than $8,000,000 within three years. All the city must do is construct streets, water and sewer improvements, at a cost not to exceed $900,000 within one year.

1. There is no urban renewal plan in place, but the Developer needs a firm commitment within 2 weeks, or she will take the Project to a neighboring city. The city should not:

A. Prepare a short contract and get it signed within 2 weeks to satisfy the developer and keep the development in town.

B. Explain that legal requirements make execution of an agreement impossible at this time and offer a non-binding letter of intent.

C. Look at all of the facts and circumstances to see if the project can be done without establishing an urban renewal area.

D. Tell the developer that the city does not use urban renewal for housing projects.

2.Developer asks the city to zone the project area in a way that prevents the inclusion of manufactured housing . The city:

A. May impose a restriction against manufactured housing because it will help keep the property values high and allow the infrastructure costs to be repaid sooner;

B. May impose the restriction so long as the Project is completed without establishing an urban renewal area.

C. May not impose a restriction against manufactured housing.

3. The Developer requests that all LMI set-aside money be used to subsidize an LMI project the same developer is doing in the city. The city:

A. May agree to this so long as the LMI project will be located in the same urban renewal area.

B. May agree to this.

C. May not agree to this.815854